• 2017 December 11

    Russian President Vladimir Putin

    On development of LNG production projects

    Today, we will discuss plans to develop liquefied natural gas production in our country. As you know, there is a reason that we gathered here, on Yamal. NOVATEK has built the largest LNG plant in Russia on the Yamal Peninsula. As you saw, we have just attended the shipment of the first batch of liquefied natural gas. This grand project required huge investment, $27 billion; it is also multi-profile, as other sectors of the Russian economy are involved in its implementation.

    In this sense, we can certainly describe it as a megaproject. It is of great importance for the country as a whole, and is yet another confirmation of Russia’s status as one of the world's leading energy powers.

    Yamal LNG opens new horizons for the gas industry’s development, for the entire national economy; it creates high-tech jobs, including in Russia’s North and Far East, where the transhipment terminal will be located. Mr Mikhelson [Chairman of the Management Board of NOVATEK] also talked about this today. This in itself is a separate interesting project, providing work to related enterprises; it lays the groundwork for the effective and balanced development of the Arctic and the Northern Sea Route.

    It is also important that this project contributes to strengthening economic cooperation with the countries of the Asia-Pacific region, primarily, our key partners in this region, including Chinese companies. We have established successful international cooperation with France, Italy, Germany, and a number of other European states.

    Of course, the number of such promising projects needs to be increased. According to experts, global demand for gas will increase by over 40 percent by 2040. It is particularly important that supplies of liquefied gas will be growing faster than any other. Here, growth can reach about 70 percent. Russia can and should occupy a decent niche on this market. Today, as you may be aware, it remains fairly modest.

    In addition to Yamal LNG, we have a large gas liquefaction centre on Sakhalin, but, to reiterate, this is clearly not enough. Our fuel and energy complex is faced with the key task of increasing capacities and volumes of LNG production.

    In this regard, I would like to emphasise a few points.

    First, the production and export of LNG should not lead to weakening of existing positions on the pipeline gas market. Moreover, they need to be retained and, of course, strengthened. The work should be constructed in such a way that the LNG projects do not compete with our pipeline gas. On the contrary, it is necessary to create conditions for balanced, complementary areas of business in order to maximise the return.

    Second, the demand for liquefied gas needs to be actively promoted within our country as well.

    Its use can be expanded, including through supplying it to remotely located customers without pipeline gas and moving public transport to cleaner and more environmentally friendly natural gas engines. In this sphere, we already have good special programmes.

    I hope we will have the chance to talk more about measures to support the consumption of liquefied gas on the domestic market during our today’s meeting.

    Third, I would like to emphasise that such projects as Yamal LNG create the foundation for the sustainable development of territories. Here in Sabetta alone it created 32,000 jobs. As Mr Mikhelson said, now the workforce is smaller but there are still tens of thousands of jobs. There is a new port, aviation and railway infrastructure, housing and social facilities. In other words, this is not the predatory, mindless mining of resources but comprehensive development of the territory, accompanied by the implementation of many programmes, including environmental ones. This is exactly the approach that should be used in future LNG projects.

    It is also important that Yamal LNG is accompanied by navigation along the Northern Sea Route, the formation of logistics routes, and a build-up of the tanker and icebreaker fleet. I am sure that this will give us unique advantages in the economy, trade and power engineering.

    Fourth, obviously to increase LNG supplies it is necessary to develop gas liquefaction capacities and create the conditions for localising the production of equipment essential for its production, storage and transportation, and this creates work for domestic industrial enterprises.

    I know that such work is being carried out now. Moreover, it should be carried out quicker so that future LNG projects are based on domestic equipment and technology as much as possible.

    And one more point. To diversify the defence industry, I suggest considering the potential participation of defence companies in projects on localising and producing high-tech products for gas companies.

    And naturally, in conclusion I would like to wish Yamal LNG success in implementing all of its plans – the second, third and the unexpected fourth line. And, of course, I wish you success in implementing the next phase, Yamal LNG-2.

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